The Boardroom as Economic Indicator

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In Tuesday’s NACD Directors Daily, a Chicago Tribune article reported that “Companies see growth but few new jobs.” According to an industry survey by the National Association for Business Economics, two-thirds of respondents expect no change in employment at their companies in the next six months. However, 65% of respondents predicted that a growth in gross domestic product of over two percent would accompany the stagnant job market.

According to NACD’s Boardroom Confidence Index (BCI), directors share this more positive view for economic growth in 2012. More than half of respondents (52.6%) forecast economic conditions to be at least “substantially better” in the upcoming year. The BCI also tracks expectations for employment growth. Specifically, whether directors forecast that their companies will expand, contract, or maintain the same workforce in an upcoming quarter. Throughout 2011, directors most commonly responded that their companies would retain the same amount of employees in the upcoming quarter. The most recent BCI, in line with the findings from the National Association for Business Economics, predicted that job growth would remain fairly stagnant in the first quarter of 2012.

Produced in collaboration with Pearl Meyer & Partners, the BCI measures corporate directors’ confidence in the economy on a quarterly basis. Results of the Q1 2012 BCI will be available in April.

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